How are the duties for electronic imports regulated in China?
To-date, the PRC lacks a clear policy regarding duties and VAT on the import of master copies via electronic means such as e-mail or the Internet. Under the current rules, it is arguable that such electronic imports are not subject to Customs duty or import VAT.
In the Notice Concerning the Transmission to Lower Levels and the Implementation of the "Provisional Measures of PRC Customs on Levying and Exemption from Customs Duties and Tax on Software Fees Related to Imported Goods", it provides that in certain circumstances payments which would otherwise be characterized as "software fees" may be excluded from the dutiable value of imported software. The Notice also states that payments made to foreign entities, even if they otherwise fall under the definition of "software fees" in the Provisional Measures, do not form a part of the dutiable value of goods where (i) no goods are imported; or (ii) the outbound payments are not directly associated with the importation of the goods.